I. Problems res in savi : 1 : east Ng taxes and in providing financial help to his daughter Donna, who Ecl:lso ant eglployze of the corporation. William believes he already has all the income and assets he needs, so he is not concerned with accumulating more. He tells you of the fo.llowmg actuons he plans to take this year and asks you to confirm that they are effective tax-saving steps for him, (1) A.t the beginning of the year, William will ask the board of directors to reduce his compensation this year from $200,000 to zero. He will work this year for free. He will also ask the board to increase Donna's compensation this year by $200,000. The board is expected to approve both proposals. (2) William has an accumulated balance of $500,000 in his account under the cor- poration's nonqualified deferred compensation plan. William has, appropriately, not yet been taxed on this amount because it has not been available to him. As- sume the $500,000 is scheduled to be distributed to him on July 1 and will be taxable at that time. William plans to give the corporation's financial officer a directive on June 30 to pay the $500,000 to Donna instead of to him. (3) William owns all of the stock in the corporation. A wealthy friend of his has for some time wanted to be a part owner of the corporation and has offered to pay $1,000 per share for any shares William wants to sell. William's adjusted basis in each of his shares is only $100. William plans to tell his friend that he is going to give 100 shares of corporate stock to Donna and that he will instruct Donna to sell the shares to the friend for $100,000. (4) William will give all of his corporate stock to Donna for one year. William will retain all voting rights with respect to the stock. After one year, the stock will revert to William. During the year Donna has the stock, William estimates about $75,000 in corporate dividends will be paid to Donna. (5) William owns the building that serves as the corporate headquarters. The cor- poration rents the building from William for $150,000 per year. William is thinking of selling to Donna for $150,000 the right to this year's rental income. In that case, Donna will pay William $150,000 plus interest at the beginning of next year. 811